Stock markets across the Gulf Cooperation Council (GCC) region faced broad declines at the start of the week, as investor confidence wavered in response to renewed U.S. tariff threats and a simultaneous dip in global oil prices. The developments have added volatility to an already cautious trading environment shaped by geopolitical tensions and macroeconomic uncertainty.
Saudi Arabia's benchmark index led regional losses, closing 0.7% lower. Shares of state-backed oil giant Aramco slipped by 1%, dragging down the broader market. The drop in Aramco's valuation came despite the company announcing a collaboration with China's BYD to explore new energy vehicle technology and development. Real estate major Dar Al Arkan also saw a sharp correction, tumbling 5.5% by market close.
In the United Arab Emirates, Dubai's main index showed resilience, ending 0.2% higher, largely supported by gains in Emaar Properties. However, Abu Dhabi’s index edged slightly lower by 0.1%, reflecting mixed investor sentiment. Qatar's stock index followed the broader negative trend, slipping 0.3%, weighed down by a 0.9% decline in shares of Qatar National Bank, the country's largest lender.
The downward momentum was heavily influenced by concerns over a potential escalation in global trade tensions. Fresh warnings of additional U.S. tariffs have sparked fears of a broader trade conflict that could dampen global economic growth. Markets are also reacting to diplomatic developments in the Middle East, including recent dialogues on nuclear and energy policies, which could have ripple effects on trade routes and oil supply chains.
Adding further pressure to GCC equities, oil prices dropped by over 2% on Monday. This decline was partly driven by optimism around U.S.-Iran talks that could eventually lead to increased Iranian oil output. Any such increase could dilute current OPEC+ production cuts and further affect revenues of oil-dependent economies in the Gulf.
The overall market tone remains cautious as traders assess the potential impact of global economic headwinds, including inflationary pressure, interest rate uncertainty, and the outcomes of pending geopolitical negotiations. The immediate future of GCC market performance is likely to hinge on the direction of crude oil benchmarks and clarity regarding international trade policy developments.
The latest sell-off in Gulf stock markets highlights the region's interconnectedness with broader global economic and political dynamics. While domestic fundamentals in several GCC countries remain strong, particularly with ongoing diversification efforts and fiscal reforms, external shocks such as trade disputes and oil price volatility continue to exert outsized influence. Investors may need to adopt a wait-and-see approach until clearer policy signals emerge from major global players. At the same time, regional markets may find support in government-led infrastructure projects and strategic sectoral investments if global uncertainties persist.